Buy Back Concept

BUY BACK SCHEME

As the name goes, builders give the idea to buy back a property after a certain period of time. The consumer can therefore make a protected investment debarring them of any potential risk. Also, the buyer has the option to retain the property and collecting it at the end of the construction time period.Buy-back schemes are quite new marketing scheme by real estate developers. This provides consumers a unique option to give back the property to the builder at any point of time which in turn helps builders to raise capital in a cheaper way.

So in general this is how a buy back scheme works - a builders offers to buy back an already sold flat at any appreciated value after the lock in period. So at the lock-in duration, the consumer can potentially keep the property or sell it off to the builder at the pre decided rate. This is pretty similar to assured return offers where the developers assure to buy back the property at a higher rate in general 1-2 years of completion of construction.

Buy-back schemes minimize the risk for homebuyers, with the builders’ promise of buying back the property at the end of the lock-in period. These schemes are a great option not only for investors but also for end users, as they remain quite certain of the return on capital after the lock-in period. Moreover, the investors even have an option of selling off the property in the open market if the market prices are higher than what is offered by the developer at the time of exit. Such schemes can do wonders when if the market is weak, as the developer promises to buy back the property within a stipulated time frame with an assured rate of return. Hence the particular market scenario is ideal for buy back scheme. Buy-back schemes can help the shy buyers purchase a property, with the promise of risk-free investment. Investors find such schemes beneficial to zero-in on a particular project.

Buy back scheme has come to developers as a rescuer to make sales of unsold inventory and raise capital in slow paced markets. This has been the marketing scheme for many leading developers especially in Delhi NCR. Besides, raising capital from individual people comes with lowinterest rates and requires less or no collateral at all

Are Buy Back Schemes reliable? That seems to be the main concern. As real estate has not come under the light of fair regulatory laws, the buyers seem to question the genuineness of these investments. So it gives the developers multiple loop holes to plunder investors and make this bad reputed market. So it comes down to the buyer to do a background check on the developers and look into their credentials for cleaner transactions. Hopefully the RERA and Xplore realty team could pave the path for better environment in realty for investment.